Press Release April 30, 2025 MADERU ENGINEERING PRIVATE LIMITED Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	30.00	ACUITE B+ | Stable | Assigned	-
Total Outstanding	30.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuite has assigned the long-term rating  at 'ACUITE B+'(read as ACUITE  B plus) on the Rs. 30 Cr. bank facilities of Maderu Engineering Private Limited. The outlook is 'Stable'. Rationale for rating The rating takes into cognizance experienced promoters and relationship with their clientele; however these are partly offset by below average financial risk profile, declining revenues albeit increasing operating profitability and stretched liquidity,

About the Company

­Karnataka based Maderu Engineering Private Limited , incorporated in 2021, previously known as Paragon Engineering Works is one of the solution providers and manufacturers of modern-day sheet metal forming in Bangalore. The company is engaged in Sheet Metal Press Components, Electrical and Electronics, Assemblies and Sub-Assemblies Automotive and Non-Automotive Parts.  The operations of the company are a manged by Mr. Gowda Venkate Gowda Mayur and Mr. Munibyregowda Venkate Gowda.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuite has considered standalone business risk profile and financial risk profile of Maderu Engineering Private Limited to arrive at its rating.

Key Rating Drivers

Strengths

Benefits derived from Experienced management The operations of the company are managed by Mr. Gowda Venkate Gowda Mayur and Mr. Munibyregowda Venkate Gowda who hold experience in the automobile components industry. The clientele base of the company includes TE Connectivity India Private Limited, Schaeffler India limited among others. Acuite believes that the experienced promoters and their relationship with their customers will benefit the company going forward.

Weaknesses

Declining Revenues albeit increase in operating profitability The revenues have decreased to Rs. 15.80 Cr. as on March 31, 2024 as compared to Rs. Rs. 20.01 Cr. as on March 31, 2023 on account of scaling down of production due to ongoing capex. The operating profitability has increased to 18.66 percent as on March 31, 2024 as compared to 7.41 percent as on March 31, 2023. The increase in margins are on account of transition from two wheeler components to four wheeler components, axels and brakes which command better margins. The company is undergoing a capex for construction of building and purchase of machineries at Hoskote, Bangalore for Rs. 25.50 Cr. to be funded by term loan(already tied up with Canara Bank) of Rs. 16.91 Cr. and promoters contribution of Rs. 8.59 Cr. The capex is expected to be completed by September 2026. Acuite believes that with the augmentation of this capex, the revenues of the Company are expected to increase over the medium term. ­Below Average Financial Risk Profile The financial risk profile is marked below average, net worth stood at Rs. 4.79 Cr. as on March 31,2024 as compared to Rs. 3.13 Cr. as on March 31,2023 due to accretion of reserves. Gearing stood at 2.12 times as on March 31, 2024 as against 2.37 times as on March 31,2023. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 3.02 times as on March 31, 2024 as compared to 3.83 times as on March 31,2023. The debt protection metrics is marked by Interest Coverage Ratio at 3.15 times as on March 31, 2024 as compared to 1.89 times as on March 31,2023 and Debt Service Coverage Ratio at 1.37 times as on March 31, 2024 as compared to 0.79 times as on March 31,2023. Net Cash Accruals/Total Debt (NCA/TD) stood at 0.20 times as on March 31, 2024 as compared to 0.10 times as on March 31,2023. Acuité believes that financial risk profile is expected to remain at similar levels due to new debt funded capex and its impact on debt protection metrices over the medium term. Intensive working capital management The intensive working capital management is marked by Gross Current Assets (GCA) of 402 days as on March 31, 2024 as compared to 234 days as on March 31, 2023. The debtor days stood at 50 days as on March 31,2024 as compared to 69 days as on March 31, 2023. Furthermore, the inventory days stood at 334 days as on March 31, 2024 as compared to 175 days as on March 31,2023. A majority of the inventory is kept at the year end in anticipation od the new production schedules and due to large number of SKUs, because the company has to maintain buffer stocks to meet demand schedules. The company maintains raw material inventory of about 60-75 days and that of finished goods of about 10 days The creditor days stood at 91 days as on March 31, 2024 from 78 days as on March 31,2023. Acuité believes that going forward the working capital operations of the company will remain intensive over the medium term.

Rating Sensitivities

­Movement in revenues and operating profitability Working Capital cycle Timely completion and stabilization of the new capex

Liquidity Position

Stretched

The liquidity is stretched marked by small but steady net cash accruals, , moderate current ratio, debt funded capex plans and high reliance on bank debts to fund the working capital requirements. The net cash accruals stood at Rs. 2.01 Cr. as on March 31, 2024 as against long term debt repayment of Rs. 1.21 Cr. over the same period. The cash and bank balances stood at Rs. 0.17 Cr. as on March 31, 2024 as compared to Rs. 0.01 Cr. as on March 31,2023. The current ratio stood at 1.41 times as on March 31, 2024 as compared to 1.36 times as on March 31,2023. The average bank limit utilization stood at 99 percent over the last six months ended, January 2025. The Company is also undergoing a debt funded capex plan which is expected to reduce financial flexibility for the immediate future. Acuité believes that going forward the liquidity position of the company will remain stretched marked by small accruals, debt funded capex and high reliance on bank borrowings to fund the working capital requirement.

Outlook: Stable

­

Other Factors affecting Rating

­None

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	15.80	20.01
PAT	Rs. Cr.	1.65	0.41
PAT Margin	(%)	10.47	2.02
Total Debt/Tangible Net Worth	Times	2.12	2.37
PBDIT/Interest	Times	3.15	1.89

Status of non-cooperation with previous CRA (if applicable)

­None

Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite)

Not applicable

Any other information

­None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History:Not Applicable

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 4.09 Simple ACUITE B+ | Stable | Assigned Canara Bank Not avl. / Not appl. Secured Overdraft Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 9.00 Simple ACUITE B+ | Stable | Assigned Canara Bank Not avl. / Not appl. Term Loan 12 Dec 2024 Not avl. / Not appl. 12 Nov 2036 16.91 Simple ACUITE B+ | Stable | Assigned

Contacts

Mohit Jain Senior Vice President - Rating Operations Vedika Lahoti Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.